The Issue: Water Risks and Communities
- Thoughtful water stewardship is essential for healthy communities, ecosystems, and economies. Freshwater demand is outpacing supply as climate change has reduced availability, while population and industrial growth have increased need. Conflicting water needs between communities and companies create risks that may limit corporate growth or threaten their ‘license to operate.’ According to projections from the research organization CDP, under current “business as usual” water management practices, approximately $63 trillion – 45% of projected global GDP – will be placed at risk by 2050. Investor best practices require attentive portfolio management, identification of solution-oriented companies that actively mitigate water consumption, and engagement with portfolio holdings to encourage conservation and efficiency.
- Encourage companies to respond to the CDP Water survey to assess and manage operations/supply chain water resources
- Establish fracking industry best practice standards to reduce water use and encourage water recycling.
- Advocate for access to water and sanitation as a human right.
- In 2009, PepsiCo adopted guidelines supporting an individual’s right to access sufficient, clean water in communities where the company operates. Our input on its corporate policies was pivotal in PepsiCo’s decision to involve local communities in the development of water resource plans.
- Apache became a leader in water management and green chemical use for hydraulic fracturing in water stressed regions, which also lowered its costs, as a result of our annual investor meetings with the company’s CEO over the past decade.
The information in this document should not be considered a recommendation to buy or sell any security. There is no assurance that any securities discussed in this report will remain in an account’s portfolio at the time you read this document. The securities discussed do not represent an account’s entire portfolio and may represent only a small portion of an account’s holdings. It should not be assumed that any securities transactions we discuss were or will prove to be profitable. Past performance does not guarantee future results. All investments involve risk, including the risk of losing principal.